UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 30, 2020
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction | (Commission | (IRS Employer | ||||||||||||
| of incorporation) | File Number) | Identification No.) | ||||||||||||
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (980 ) 474-3700
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On April 30, 2020, SPX Corporation (the “Company”) issued the press release attached as Exhibit 99.1 hereto and incorporated herein by reference.
The press release incorporated by reference into this Item 2.02 contains certain non-GAAP financial measures, including disclosure regarding “adjusted consolidated revenue” and “adjusted segment income (loss)”, defined as consolidated revenue and segment income (loss) for the Company excluding the “All Other” group of operating segments, with “All Other” comprised of the results of the South African and SPX Heat Transfer ("Heat Transfer") operations. Due, in part, to certain wind-down activities, and the related decline in volumes, the South African and Heat Transfer operations have a diminishing impact on the Company's operating results over the long term. As such, the Company’s management believes it is useful to investors to disclose revenues and segment income (loss) without the results of the “All Other” group of operating segments to provide investors with metrics that the Company’s management uses to measure the overall performance of its businesses. Additionally, the Company included adjustments to arrive at adjusted segment income (loss) by excluding (i) non-recurring charges associated with the step-up of inventory (to fair value) acquired in connection with the Sabik and Cues acquisitions that were completed on February 1, 2019 and June 7, 2018, respectively, (ii) acquisition related charges, and (iii) amortization expense associated with acquired intangible assets. Adjusted consolidated revenue and adjusted segment income (loss) do not provide investors with an accurate measure of, and should not be used as substitutes for, the Company’s revenues and segment income (loss) as determined in accordance with accounting principles generally accepted in the United States (“GAAP”), and may not be comparable to similarly titled measures reported by other companies.
The press release incorporated by reference into this Item 2.02 also contains disclosure regarding “adjusted segment income” for the Company’s Detection and Measurement reportable segment, with “adjusted segment income” defined as segment income for its Detection and Measurement reportable segment excluding the inventory step-up charges and amortization from acquired intangibles. The press release also contains disclosure regarding “adjusted segment income” for the Company's HVAC reportable segment, defined as segment income for its HVAC reportable segment excluding acquisition related charges and amortization from acquired intangibles. Adjusted segment income for the Detection and Measurement and HVAC reportable segments do not provide investors with an accurate measure of, and should not be used as a substitute for, segment income of the Detection and Measurement and HVAC reportable segments as determined in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.
The press release incorporated by reference into this Item 2.02 also contains disclosure regarding “adjusted operating income” and “adjusted earnings per share”, defined as operating income and diluted net income per share from continuing operations excluding the following items, as applicable: (a) results of the “All Other” group of operating segments, (b) non-service pension and postretirement expense (income), (c) acquisition related charges, (d) income and charges related to the prior sale of the Company’s Dry Cooling business, (e) amortization expense associated with acquired intangible assets, (f) gains on an equity security associated with a fair value adjustment, and (g) certain discrete income tax charges and benefits, as applicable, as well as (h) the income tax impact of items (a) through (f). In addition to the Company’s “All Other” group of operating segments, as described above, the Company’s management views the impact related to each of the other items as not indicative of the Company’s ongoing performance. The Company believes that inclusion of only the service cost and prior service cost components of pension and postretirement expense better reflects the ongoing costs of providing pension and postretirement benefits to its employees. Other components of GAAP pension and postretirement expense (income) are mainly driven by market performance, and the Company manages these separately from the operational performance of its business. The Company believes adjusted operating income and adjusted earnings per share, when read in conjunction with operating income and diluted net income per share from continuing operations, gives investors a useful tool to assess and understand the Company’s overall financial performance, because they exclude items of income or expense that the Company believes are not reflective of its ongoing operating performance, allowing for a better period-to-period comparison of operations of the Company. Additionally, the Company’s management uses adjusted operating income and adjusted earnings per share as measures of the Company’s performance. The adjusted operating income and adjusted earnings per share measures do not provide investors with an accurate measure of the actual operating income and diluted income per share from continuing operations reported by the Company and should not be considered as substitutes for operating income and diluted income per share from continuing operations as determined in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.
The press release incorporated by reference into this Item 2.02 also contains disclosure regarding organic revenue growth (decline), defined as revenue growth (decline) excluding the effects of foreign currency fluctuations and acquisitions/divestitures, as applicable. The Company’s management believes that organic revenue growth (decline) is a useful financial measure for investors in evaluating operating performance for the periods presented, because excluding the effect of currency fluctuations and acquisitions/divestitures, when read in conjunction with the Company’s revenues, presents a useful tool to
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evaluate the Company’s ongoing operations and provides investors with a tool they can use to evaluate the Company’s management of assets held from period to period. In addition, organic revenue growth (decline) is one of the factors the Company’s management uses in internal evaluations of the overall performance of its business. This metric, however, should not be considered a substitute for revenue growth (decline) as determined in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.
Refer to the tables included in the press release for the components of each of the Company’s non-GAAP financial measures referred to above, and for the reconciliations of these numbers to their respective comparable GAAP measures.
The information in this Report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Report shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description | |||||||
| 99.1 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SPX CORPORATION | ||||||||
| (Registrant) | ||||||||
| Date: April 30, 2020 | By: | /s/ Scott W. Sproule | ||||||
| Scott W. Sproule | ||||||||
| Vice President, Chief Financial Officer and | ||||||||
| Treasurer | ||||||||
Exhibit 99.1
SPX Reports First Quarter 2020 Results
Q1 GAAP EPS of $0.50; Adjusted EPS* of $0.62
Solid First Quarter Performance
Withdrawing 2020 Guidance on Near-Term Uncertainty
Well-Positioned to Navigate Challenging Environment; Substantial Available Liquidity
CHARLOTTE, N.C., April 30, 2020 /Globe Newswire/ -- SPX Corporation (NYSE:SPXC) today reported results for the quarter ended March 28, 2020.
Gene Lowe, President and CEO, remarked, “SPX’s first quarter 2020 performance was strong overall. Our Engineered Solutions segment generated a significant increase in segment income, partially offset by the impact of lower weather-driven demand of HVAC heating products compared with the strong prior-year winter. During the quarter, we experienced only a modest impact from the COVID-19 crisis. However, the effect accelerated during March and April, as actions to slow the rate of infection grew outside of China. As a result of the current uncertain economic environment, we are withdrawing our full-year 2020 guidance.”
Mr. Lowe continued, “We believe that SPX is well positioned to manage through the current difficult environment with our strong balance sheet and liquidity position, our high portion of replacement sales, and our leadership role in niche markets for products and services that are essential to critical infrastructure. Our business system has enabled us to adapt successfully to a rapidly changing environment by leveraging the processes and practices we have put in place company-wide to drive efficiencies. Additionally, our team remains keenly focused on managing the levers in our control to mitigate the effect of near-term economic weakness, while continuing to make employee safety our top priority, and protecting SPX’s ability to react quickly in a recovery.”
First Quarter 2020 Overview:
For the first quarter of 2020, the company reported revenue of $369.3 million and operating income of $32.7 million, compared with revenue of $343.6 million and operating income of $3.0 million in the first quarter of 2019. Diluted income per share from continuing operations in the first quarter of 2020 was $0.50, compared with a diluted income per share of $0.01 in the first quarter of 2019.
SPX’s adjusted revenue* was $365.3 million and adjusted operating income* was $39.2 million, compared with adjusted revenue* of $351.5 million and adjusted operating income* of $31.9 million in the first quarter of 2019. Adjusted income per share* in the first quarter of 2020 was $0.62, compared with $0.51 in the first quarter of 2019.
First Quarter Financial Comparisons:
GAAP Results:
| ($ millions) | Q1 2020 | Q1 2019 | ||||||||||||
| Revenue | $ | 369.3 | $ | 343.6 | ||||||||||
| Segment Income | 47.2 | 20.8 | ||||||||||||
| Operating Income | 32.7 | 3.0 | ||||||||||||
Adjusted Results:
| ($ millions) | Q1 2020 | Q1 2019 | ||||||||||||
| Adjusted Revenue* | $ | 365.3 | $ | 351.5 | ||||||||||
| Adjusted Segment Income* | 53.8 | 46.3 | ||||||||||||
| Adjusted Operating Income* | 39.2 | 31.9 | ||||||||||||
* Non-GAAP financial measure. See attached schedules for reconciliation to most comparable GAAP financial measure.
HVAC
Revenue for Q1 2020 was $118.5 million, compared with $128.4 million in Q1 2019, a decrease of 7.7%, including an 8.5% increase from acquisitions and a 0.5% unfavorable impact related to currency fluctuation. Organic
revenue* decreased 15.7%, primarily reflecting a decrease in seasonal market demand for heating products. A decline in international cooling volumes associated with the COVID-19 pandemic was largely offset by higher sales of cooling products in the Americas region.
Segment income in Q1 2020 was $15.0 million, compared to $18.4 million in Q1 2019. Adjusted segment income*, which excludes intangible amortization expense of $0.8 million and acquisition related costs of $0.1 million, was $15.9 million, or 13.4% of revenue. This compares with adjusted segment income* of $18.5 million, or 14.4% of revenue in Q1 2019, which excludes intangible amortization expense of $0.1 million. The decrease in adjusted segment income* and 100 basis point decrease in adjusted segment income margin* was due to lower sales volumes of heating products.
Detection & Measurement
Revenue for Q1 2020 was $91.9 million, compared with $85.1 million in Q1 2019, an increase of 8.0%, including a 2.5% increase from the Sabik acquisition and a 0.9% unfavorable impact related to currency fluctuation. Organic revenue* increased 6.4%, largely due to the timing of project-related sales compared with 2019.
Segment income in Q1 2020 was $18.2 million, compared to $17.0 million in Q1 2019. Adjusted segment income*, which excludes intangible amortization expense of $1.8 million, was $20.0 million, or 21.8% of revenue. This compares with adjusted segment income* of $19.8 million, or 23.3% of revenue, in Q1 2019, which excludes intangible amortization expense of $1.5 million and acquisition related costs of $1.3 million. The 150 basis point decrease in adjusted segment income margin* was driven primarily by a less favorable business mix.
Engineered Solutions
Revenue in Q1 2020 was $154.9 million, compared with $138.0 million in Q1 2019, an increase of 12.2%. The increase was driven by higher revenue in our Transformers business and, to a lesser extent, in our process cooling business.
Segment income in Q1 2020 was $17.9 million, or 11.6% of revenue, compared with segment income of $8.0 million, or 5.8% of revenue, in Q1 2019. The increase in income and margin was driven primarily by the higher revenue noted above.
All Other
All Other, which includes the South African and Heat Transfer operations, had revenue of $4.0 million in Q1 2020, compared with ($7.9) million in Q1 2019. The increase was due largely to a prior-year asset impairment that reduced the cumulative revenue associated with the South African projects by $17.5 million.
All Other incurred a loss in Q1 2020 of $3.9 million, compared with a loss of $22.6 million in Q1 2019. The decrease in the loss was due primarily to the asset impairment noted above associated with the South African projects in the prior year period.
Financial Update:
As of March 28, 2020, SPX had total outstanding debt of $511.5 million and total cash of $163.1 million. During Q1 2020, SPX generated net operating cash from continuing operations of $2.7 million, including net cash usage associated with the South African operations of approximately $3 million. Net leverage, as calculated under the company’s bank credit agreement, was 1.6x, unchanged from the end of 2019.
Non-GAAP Presentation: To provide additional clarity to its operating results, the company discusses results that include “adjusted” non-GAAP financial measures. Adjusted results for the company exclude, among other items, the effect of the South African and Heat Transfer operations, categorized as “All Other” in the company’s segment reporting structure. The company reports separately on the results of the “All Other” category. The company anticipates reporting the results of businesses included in the “All Other” category as discontinued operations, at such time as they meet the accounting requirements for this treatment.
Form 10-Q: The company expects to file its quarterly report on Form 10-Q for the quarter ended March 28, 2020 with the Securities and Exchange Commission on or before May 11, 2020. This press release should be read in conjunction with that filing, which will be available on the company's website at www.spx.com, in the Investor Relations section.
Conference Call: SPX will host a conference call at 4:45 p.m. (EDT) today to discuss first quarter results. The call will be simultaneously webcast via the company's website at www.spx.com and the slide presentation will be available in the Investor Relations section of the site.
Conference call
Dial in: 877-341-7727
From outside the United States: +1 262-558-6098
Participant code: 3364666
A replay of the call will be available by telephone through Thursday, May 7th.
To listen to a replay of the call
Dial in: 855-859-2056
From outside the United States: +1 404-537-3406
Participant code: 3364666
Upcoming Investor Events: Company management plans to conduct virtual meetings with investors during the second quarter of 2020 and SPX will also be virtually participating in the Oppenheimer Industrial Growth Conference on May 5th. In addition, SPX will be virtually hosting SPX Corporation’s Annual Meeting of Stockholders on Thursday, May 14th at 8am eastern time.
About SPX Corporation: SPX Corporation is a supplier of highly engineered products and technologies, holding leadership positions in the HVAC, detection and measurement, and engineered solutions markets. Based in Charlotte, North Carolina, SPX Corporation had approximately $1.5 billion in annual revenue in 2020 and over 4,500 employees in 17 countries. SPX Corporation is listed on the New York Stock Exchange under the ticker symbol “SPXC.” For more information, please visit www.spx.com.
*Non-GAAP financial measure. See attached schedules for reconciliation to most comparable GAAP financial measure.
Certain statements in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. Actual results may differ materially from these statements. The words “believe,” “expect,” “anticipate,” “project” and similar expressions identify forward-looking statements. Please read these forward-looking statements in conjunction with the company’s documents filed with the Securities and Exchange Commission, including the company’s most recent annual reports on Form 10-K. These filings identify important risk factors and other uncertainties that could cause actual results to differ from those contained in the forward-looking statements. In addition to the risks and uncertainties identified in those filings, the forward-looking statements contained in this press release are subject to risks and uncertainties related to the COVID-19 pandemic, including the impact of the pandemic or related government responses on the company’s businesses, the businesses of its customers and vendors, and whether the company’s businesses and those of its customers and vendors will continue to be treated as “essential” operations under government orders restricting business activities or, even if so treated, whether health and safety concerns might otherwise require certain of the company’s operations to be halted for some period of time. Although the company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. In addition, forward-looking statements are based on the company’s current complement of businesses, which is subject to change.
Statements in this press release speak only as of the date of this press release, and SPX disclaims any responsibility to update or revise such statements.
SOURCE SPX Corporation.
Investor and Media Contacts:
Paul Clegg, VP, Investor Relations and Communications
Phone: 980-474-3806
E-mail: spx.investor@spx.com
Pat Uotila, Manager, Investor Relations
Phone: 980-474-3806
E-mail: spx.investor@spx.com
| SPX CORPORATION AND SUBSIDIARIES | |||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
| (Unaudited; in millions, except per share amounts) | |||||||||||
| Three months ended | |||||||||||
| March 28, 2020 | March 30, 2019 | ||||||||||
| Revenues | $ | 369.3 | $ | 343.6 | |||||||
| Costs and expenses: | |||||||||||
| Cost of products sold | 255.2 | 260.4 | |||||||||
| Selling, general and administrative | 78.9 | 76.7 | |||||||||
| Intangible amortization | 2.6 | 1.6 | |||||||||
| Special charges, net | 0.3 | 0.1 | |||||||||
| Other operating (income) expense | (0.4) | 1.8 | |||||||||
| Operating income | 32.7 | 3.0 | |||||||||
| Other income, net | 0.7 | 7.2 | |||||||||
| Interest expense | (4.7) | (5.3) | |||||||||
| Interest income | — | 0.3 | |||||||||
| Income from continuing operations before income taxes | 28.7 | 5.2 | |||||||||
| Income tax provision | (6.0) | (4.6) | |||||||||
| Income from continuing operations | 22.7 | 0.6 | |||||||||
| Income (loss) from discontinued operations, net of tax | — | — | |||||||||
| Loss on disposition of discontinued operations, net of tax | — | (1.4) | |||||||||
| Loss from discontinued operations, net of tax | — | (1.4) | |||||||||
| Net income (loss) | $ | 22.7 | $ | (0.8) | |||||||
| Basic income (loss) per share of common stock: | |||||||||||
| Income from continuing operations | $ | 0.51 | $ | 0.01 | |||||||
| Loss from discontinued operations | — | (0.03) | |||||||||
| Net income (loss) per share | $ | 0.51 | $ | (0.02) | |||||||
| Weighted-average number of common shares outstanding — basic | 44.309 | 43.618 | |||||||||
| Diluted income (loss) per share of common stock: | |||||||||||
| Income from continuing operations | $ | 0.50 | $ | 0.01 | |||||||
| Loss from discontinued operations | — | (0.03) | |||||||||
| Net income (loss) per share | $ | 0.50 | $ | (0.02) | |||||||
| Weighted-average number of common shares outstanding — diluted | 45.527 | 44.880 | |||||||||
| SPX CORPORATION AND SUBSIDIARIES | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| (Unaudited; in millions) | |||||||||||
| March 28, 2020 | December 31, 2019 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and equivalents | $ | 163.1 | $ | 54.7 | |||||||
| Accounts receivable, net | 239.6 | 265.9 | |||||||||
| Contract assets | 73.6 | 63.4 | |||||||||
| Inventories, net | 175.1 | 154.9 | |||||||||
| Other current assets (includes income taxes receivable of $22.7 and $23.0 at March 28, 2020 and December 31, 2019, respectively) | 92.6 | 93.2 | |||||||||
| Total current assets | 744.0 | 632.1 | |||||||||
| Property, plant and equipment: | |||||||||||
| Land | 18.7 | 18.7 | |||||||||
| Buildings and leasehold improvements | 121.0 | 121.9 | |||||||||
| Machinery and equipment | 343.3 | 342.6 | |||||||||
| 483.0 | 483.2 | ||||||||||
| Accumulated depreciation | (306.1) | (304.1) | |||||||||
| Property, plant and equipment, net | 176.9 | 179.1 | |||||||||
| Goodwill | 446.6 | 449.3 | |||||||||
| Intangibles, net | 247.6 | 251.7 | |||||||||
| Other assets | 592.0 | 605.9 | |||||||||
| Deferred income taxes | 14.8 | 16.4 | |||||||||
| TOTAL ASSETS | $ | 2,221.9 | $ | 2,134.5 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 148.0 | $ | 141.6 | |||||||
| Contract liabilities | 94.0 | 100.8 | |||||||||
| Accrued expenses | 195.0 | 220.4 | |||||||||
| Income taxes payable | 2.2 | 2.2 | |||||||||
| Short-term debt | 260.3 | 142.6 | |||||||||
| Current maturities of long-term debt | 2.6 | 1.0 | |||||||||
| Total current liabilities | 702.1 | 608.6 | |||||||||
| Long-term debt | 248.6 | 249.9 | |||||||||
| Deferred and other income taxes | 26.2 | 26.3 | |||||||||
| Other long-term liabilities | 729.9 | 747.3 | |||||||||
| Total long-term liabilities | 1,004.7 | 1,023.5 | |||||||||
| Equity: | |||||||||||
| Common stock | 0.5 | 0.5 | |||||||||
| Paid-in capital | 1,298.5 | 1,302.4 | |||||||||
| Retained deficit | (562.6) | (584.8) | |||||||||
| Accumulated other comprehensive income | 231.4 | 244.3 | |||||||||
| Common stock in treasury | (452.7) | (460.0) | |||||||||
| Total equity | 515.1 | 502.4 | |||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 2,221.9 | $ | 2,134.5 | |||||||
| SPX CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||||||
| RESULTS OF REPORTABLE AND OTHER OPERATING SEGMENTS | ||||||||||||||||||||||||||
| (Unaudited; in millions) | ||||||||||||||||||||||||||
| Three months ended | ||||||||||||||||||||||||||
| March 28, 2020 | March 30, 2019 | Δ | %/bps | |||||||||||||||||||||||
| HVAC reportable segment | ||||||||||||||||||||||||||
| Revenues | $ | 118.5 | $ | 128.4 | $ | (9.9) | (7.7)% | |||||||||||||||||||
| Gross profit | 40.4 | 41.6 | (1.2) | |||||||||||||||||||||||
| Selling, general and administrative expense | 24.6 | 23.1 | 1.5 | |||||||||||||||||||||||
| Intangible amortization expense | 0.8 | 0.1 | 0.7 | |||||||||||||||||||||||
| Income | $ | 15.0 | $ | 18.4 | $ | (3.4) | (18.5)% | |||||||||||||||||||
| as a percent of revenues | 12.7 | % | 14.3 | % | -160 bps | |||||||||||||||||||||
| Detection & Measurement reportable segment | ||||||||||||||||||||||||||
| Revenues | $ | 91.9 | $ | 85.1 | $ | 6.8 | 8.0% | |||||||||||||||||||
| Gross profit | 41.9 | 39.4 | 2.5 | |||||||||||||||||||||||
| Selling, general and administrative expense | 21.9 | 20.9 | 1.0 | |||||||||||||||||||||||
| Intangible amortization expense | 1.8 | 1.5 | 0.3 | |||||||||||||||||||||||
| Income | $ | 18.2 | $ | 17.0 | $ | 1.2 | 7.1% | |||||||||||||||||||
| as a percent of revenues | 19.8 | % | 20.0 | % | -20 bps | |||||||||||||||||||||
| Engineered Solutions reportable segment | ||||||||||||||||||||||||||
| Revenues | $ | 154.9 | $ | 138.0 | $ | 16.9 | 12.2% | |||||||||||||||||||
| Gross profit | 31.7 | 21.6 | 10.1 | |||||||||||||||||||||||
| Selling, general and administrative expense | 13.8 | 13.6 | 0.2 | |||||||||||||||||||||||
| Income | $ | 17.9 | $ | 8.0 | $ | 9.9 | 123.8% | |||||||||||||||||||
| as a percent of revenues | 11.6 | % | 5.8 | % | 580 bps | |||||||||||||||||||||
| All Other | ||||||||||||||||||||||||||
| Revenues | $ | 4.0 | $ | (7.9) | $ | 11.9 | 150.6% | |||||||||||||||||||
| Gross profit (loss) | 0.1 | (19.4) | 19.5 | |||||||||||||||||||||||
| Selling, general and administrative expense | 4.0 | 3.2 | 0.8 | |||||||||||||||||||||||
| Loss | $ | (3.9) | $ | (22.6) | $ | 18.7 | 82.7% | |||||||||||||||||||
| Consolidated Revenues | $ | 369.3 | $ | 343.6 | $ | 25.7 | 7.5% | |||||||||||||||||||
| Consolidated Segment Income | 47.2 | 20.8 | 26.4 | 126.9% | ||||||||||||||||||||||
| as a percent of revenues | 12.8 | % | 6.1 | % | 670 bps | |||||||||||||||||||||
| Total segment income | $ | 47.2 | $ | 20.8 | $ | 26.4 | ||||||||||||||||||||
| Corporate expense | 11.1 | 12.4 | (1.3) | |||||||||||||||||||||||
| Long-term incentive compensation expense | 3.5 | 3.5 | — | |||||||||||||||||||||||
| Special charges, net | 0.3 | 0.1 | 0.2 | |||||||||||||||||||||||
| Other operating (income) expense | (0.4) | 1.8 | (2.2) | |||||||||||||||||||||||
| Consolidated operating income | $ | 32.7 | $ | 3.0 | $ | 29.7 | 990.0% | |||||||||||||||||||
| as a percent of revenues | 8.9 | % | 0.9 | % | 800 bps | |||||||||||||||||||||
| SPX CORPORATION AND SUBSIDIARIES | ||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
| (Unaudited; in millions) | ||||||||||||||
| Three months ended | ||||||||||||||
| March 28, 2020 | March 30, 2019 | |||||||||||||
| Cash flows from (used in) operating activities: | ||||||||||||||
| Net income (loss) | $ | 22.7 | $ | (0.8) | ||||||||||
| Less: Loss from discontinued operations, net of tax | — | (1.4) | ||||||||||||
| Income from continuing operations | 22.7 | 0.6 | ||||||||||||
| Adjustments to reconcile income from continuing operations to net cash from (used in) operating activities: | ||||||||||||||
| Special charges, net | 0.3 | 0.1 | ||||||||||||
| Gain on change in fair value of equity security | — | (6.3) | ||||||||||||
| Deferred and other income taxes | 3.9 | 2.5 | ||||||||||||
| Depreciation and amortization | 9.2 | 8.1 | ||||||||||||
| Pension and other employee benefits | 2.2 | 2.8 | ||||||||||||
| Long-term incentive compensation | 3.5 | 3.5 | ||||||||||||
| Other, net | 0.7 | 0.3 | ||||||||||||
| Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||||||||||
| Accounts receivable and other assets | 23.8 | 47.5 | ||||||||||||
| Inventories | (22.7) | (14.4) | ||||||||||||
| Accounts payable, accrued expenses and other | (40.4) | (32.2) | ||||||||||||
| Cash spending on restructuring actions | (0.5) | (1.0) | ||||||||||||
| Net cash from continuing operations | 2.7 | 11.5 | ||||||||||||
| Net cash used in discontinued operations | (3.1) | (0.9) | ||||||||||||
| Net cash from (used in) operating activities | (0.4) | 10.6 | ||||||||||||
| Cash flows from (used in) investing activities: | ||||||||||||||
| Proceeds from company-owned life insurance policies, net | 1.1 | 0.5 | ||||||||||||
| Business acquisitions, net of cash acquired | — | (77.0) | ||||||||||||
| Net proceeds from sales of assets | — | 5.5 | ||||||||||||
| Capital expenditures | (3.6) | (3.7) | ||||||||||||
| Net cash used in continuing operations | (2.5) | (74.7) | ||||||||||||
| Net cash from discontinued operations | — | — | ||||||||||||
| Net cash used in investing activities | (2.5) | (74.7) | ||||||||||||
| Cash flows from (used in) financing activities: | ||||||||||||||
| Borrowings under senior credit facilities | 178.7 | 89.3 | ||||||||||||
| Repayments under senior credit facilities | (88.7) | (64.5) | ||||||||||||
| Borrowings under trade receivables financing arrangement | 55.0 | 40.0 | ||||||||||||
| Repayments under trade receivables financing arrangement | (27.0) | (29.0) | ||||||||||||
| Net borrowings (repayments) under other financing arrangements | (0.7) | 2.8 | ||||||||||||
| Payment of contingent consideration | (1.5) | — | ||||||||||||
| Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options | (2.8) | (5.9) | ||||||||||||
| Net cash from continuing operations | 113.0 | 32.7 | ||||||||||||
| Net cash from (used in) discontinued operations | — | — | ||||||||||||
| Net cash from financing activities | 113.0 | 32.7 | ||||||||||||
| Change in cash and equivalents due to changes in foreign currency exchange rates | (1.7) | 1.6 | ||||||||||||
| Net change in cash and equivalents | 108.4 | (29.8) | ||||||||||||
| Consolidated cash and equivalents, beginning of period | 54.7 | 68.8 | ||||||||||||
| Consolidated cash and equivalents, end of period | $ | 163.1 | $ | 39.0 | ||||||||||
| SPX CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
| CASH AND DEBT RECONCILIATION | ||||||||||||||||||||||||||||||||
| (Unaudited; in millions) | ||||||||||||||||||||||||||||||||
| Three months ended | ||||||||||||||||||||||||||||||||
| March 28, 2020 | ||||||||||||||||||||||||||||||||
| Beginning cash and equivalents | $ | 54.7 | ||||||||||||||||||||||||||||||
| Cash from continuing operations | 2.7 | |||||||||||||||||||||||||||||||
| Capital expenditures | (3.6) | |||||||||||||||||||||||||||||||
| Proceeds from company-owned life insurance policies, net | 1.1 | |||||||||||||||||||||||||||||||
| Borrowings under senior credit facilities | 178.7 | |||||||||||||||||||||||||||||||
| Repayments under senior credit facilities | (88.7) | |||||||||||||||||||||||||||||||
| Net borrowings under other financing arrangements | 27.3 | |||||||||||||||||||||||||||||||
| Payment of contingent consideration | (1.5) | |||||||||||||||||||||||||||||||
| Minimum withholdings paid on behalf of employees for net share settlements, net of proceeds from the exercise of employee stock options | (2.8) | |||||||||||||||||||||||||||||||
| Cash used in discontinued operations | (3.1) | |||||||||||||||||||||||||||||||
| Change in cash due to changes in foreign currency exchange rates | (1.7) | |||||||||||||||||||||||||||||||
| Ending cash and equivalents | $ | 163.1 | ||||||||||||||||||||||||||||||
| Debt at | Debt at | |||||||||||||||||||||||||||||||
| December 31, 2019 | Borrowings | Repayments | Other | March 28, 2020 | ||||||||||||||||||||||||||||
| Revolving loans | $ | 140.0 | $ | 178.7 | $ | (88.7) | $ | — | $ | 230.0 | ||||||||||||||||||||||
| Term loan | 250.0 | — | — | — | 250.0 | |||||||||||||||||||||||||||
| Trade receivables financing arrangement | — | 55.0 | (27.0) | — | 28.0 | |||||||||||||||||||||||||||
| Other indebtedness | 5.3 | — | (0.7) | 0.6 | 5.2 | |||||||||||||||||||||||||||
| Less: Deferred financing costs associated with the term loan | (1.8) | — | — | 0.1 | (1.7) | |||||||||||||||||||||||||||
| Totals | $ | 393.5 | $ | 233.7 | $ | (116.4) | $ | 0.7 | $ | 511.5 | ||||||||||||||||||||||
| SPX CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| NON-GAAP RECONCILIATION - ORGANIC REVENUE | |||||||||||||||||||||||||||||
| HVAC, DETECTION & MEASUREMENT & ENGINEERED SOLUTIONS REPORTABLE SEGMENTS | |||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||
| Three months ended March 28, 2020 | |||||||||||||||||||||||||||||
| HVAC | Detection & Measurement | Engineered Solutions | |||||||||||||||||||||||||||
| Net Revenue Growth (Decline) | (7.7) | % | 8.0 | % | 12.2 | % | |||||||||||||||||||||||
| Exclude: Foreign Currency | (0.5) | % | (0.9) | % | — | % | |||||||||||||||||||||||
| Exclude: Acquisitions | 8.5 | % | 2.5 | % | — | % | |||||||||||||||||||||||
| Organic Revenue Growth (Decline) | (15.7) | % | 6.4 | % | 12.2 | % | |||||||||||||||||||||||
| SPX CORPORATION AND SUBSIDIARIES | ||||||||||||||
| NON-GAAP RECONCILIATION - REVENUE AND SEGMENT INCOME | ||||||||||||||
| (Unaudited; in millions) | ||||||||||||||
| CONSOLIDATED SPX: | Three months ended | |||||||||||||
| March 28, 2020 | March 30, 2019 | |||||||||||||
| Consolidated revenue | $ | 369.3 | $ | 343.6 | ||||||||||
Exclude: "All Other" operating segments(1) | 4.0 | (7.9) | ||||||||||||
| Adjusted consolidated revenue | $ | 365.3 | $ | 351.5 | ||||||||||
| Total segment income | $ | 47.2 | $ | 20.8 | ||||||||||
Exclude: "All Other" operating segments(1) | (3.9) | (22.6) | ||||||||||||
Exclude: One time acquisition related costs (2) | (0.1) | (1.3) | ||||||||||||
Exclude: Amortization expense (3) | (2.6) | (1.6) | ||||||||||||
| Adjusted segment income | $ | 53.8 | $ | 46.3 | ||||||||||
as a percent of adjusted revenues (4) | 14.7 | % | 13.2 | % | ||||||||||
| HVAC REPORTABLE SEGMENT: | ||||||||||||||
| Three months ended | ||||||||||||||
| March 28, 2020 | March 30, 2019 | |||||||||||||
| HVAC segment income | $ | 15.0 | $ | 18.4 | ||||||||||
Exclude: One time acquisition related costs (2) | (0.1) | — | ||||||||||||
Exclude: Amortization expense (3) | (0.8) | (0.1) | ||||||||||||
| HVAC adjusted segment income | $ | 15.9 | $ | 18.5 | ||||||||||
as a percent of HVAC segment revenues (4) | 13.4 | % | 14.4 | % | ||||||||||
| DETECTION & MEASUREMENT REPORTABLE SEGMENT: | ||||||||||||||
| Three months ended | ||||||||||||||
| March 28, 2020 | March 30, 2019 | |||||||||||||
| Detection & Measurement segment income | $ | 18.2 | $ | 17.0 | ||||||||||
Exclude: One time acquisition related costs (2) | — | (1.3) | ||||||||||||
Exclude: Amortization expense (3) | (1.8) | (1.5) | ||||||||||||
| Detection & Measurement adjusted segment income | $ | 20.0 | $ | 19.8 | ||||||||||
as a percent of Detection & Measurement segment revenues (4) | 21.8 | % | 23.3 | % | ||||||||||
(1) Represents the removal of the financial results of our South Africa and Heat Transfer businesses. Note: These businesses are reported as an "All Other" group of operating segments for U.S. GAAP purposes due to certain wind-down activities that are occurring within these businesses. | ||||||||||||||
(2) Represents one-time acquisition related costs during the three months ended March 28, 2020 and additional "Cost of products sold" recorded during the three months ended March 30, 2019 related to the step-up of inventory (to fair value) acquired in connection with the Sabik and Cues acquisitions. | ||||||||||||||
(3) Represents amortization expense associated with acquired intangible assets. | ||||||||||||||
(4) See "Results of Reportable and Other Operating Segments" for applicable percentages based on GAAP results. | ||||||||||||||
| SPX CORPORATION AND SUBSIDIARIES | ||||||||||||||
| NON-GAAP RECONCILIATION - OPERATING INCOME | ||||||||||||||
| (Unaudited; in millions) | ||||||||||||||
| Three months ended | ||||||||||||||
| March 28, 2020 | March 30, 2019 | |||||||||||||
| Operating income | $ | 32.7 | $ | 3.0 | ||||||||||
| Exclude: | ||||||||||||||
Aggregate operating losses of the South Africa and Heat Transfer businesses (1) | (4.1) | (22.6) | ||||||||||||
One-time acquisition related costs (2) | (0.2) | (2.9) | ||||||||||||
Other operating income/expense (3) | 0.4 | (1.8) | ||||||||||||
Amortization expense (4) | (2.6) | (1.6) | ||||||||||||
| Adjusted operating income | $ | 39.2 | $ | 31.9 | ||||||||||
as a percent of adjusted revenues (5) | 10.7 | % | 9.1 | % | ||||||||||
(1) Represents the removal of the financial results of these businesses, inclusive of "special charges" of $0.2 and $0.0 during the three months ended March 28, 2020 and March 30, 2019, respectively. | ||||||||||||||
(2) Represents charges during the three months ended March 28, 2020 for integration and transaction costs of $0.2, and charges during the three months ended March 30, 2019 associated with the Sabik and Cues acquisitions associated with inventory step-up $1.3 and integration and transaction costs of $1.6. | ||||||||||||||
(3) Represents income/expense associated with revisions to estimates of certain liabilities retained in connection with the 2016 sale of the dry cooling business. | ||||||||||||||
(4) Represents amortization expense associated with acquired intangible assets. | ||||||||||||||
(5) See "Results of Reportable and Other Operating Segments" for applicable percentages based on GAAP results. | ||||||||||||||
| SPX CORPORATION AND SUBSIDIARIES | |||||||||||||||||
| NON-GAAP RECONCILIATION - EARNINGS PER SHARE | |||||||||||||||||
| Three Months Ended March 28, 2020 | |||||||||||||||||
| (Unaudited; in millions, except per share values) | |||||||||||||||||
| GAAP | Adjustments | Adjusted | |||||||||||||||
Segment income (1) | $ | 47.2 | $ | 6.6 | $ | 53.8 | |||||||||||
Corporate expense (2) | (11.1) | 0.1 | (11.0) | ||||||||||||||
| Long-term incentive compensation expense | (3.5) | — | (3.5) | ||||||||||||||
Special charges, net (3) | (0.3) | 0.2 | (0.1) | ||||||||||||||
Other operating income (4) | 0.4 | (0.4) | — | ||||||||||||||
| Operating income | 32.7 | 6.5 | 39.2 | ||||||||||||||
Other income, net (5) | 0.7 | 0.5 | 1.2 | ||||||||||||||
| Interest expense, net | (4.7) | — | (4.7) | ||||||||||||||
| Income from continuing operations before income taxes | 28.7 | 7.0 | 35.7 | ||||||||||||||
Income tax provision (6) | (6.0) | (1.3) | (7.3) | ||||||||||||||
| Income from continuing operations | 22.7 | 5.7 | 28.4 | ||||||||||||||
| Dilutive shares outstanding | 45.527 | 45.527 | |||||||||||||||
| Earnings per share from continuing operations | $ | 0.50 | $ | 0.62 | |||||||||||||
(1) Adjustment primarily represents the removal of (i) operating losses associated with the South Africa and Heat Transfer businesses ($3.9) and (ii) amortization expense associated with acquired intangible assets ($2.6). | |||||||||||||||||
(2) Adjustment represents the removal of acquisition related expenses incurred during the period. | |||||||||||||||||
(3) Adjustment represents the removal of restructuring charges associated with the South Africa business. | |||||||||||||||||
(4) Adjustment represents removal of income associated with revisions to estimates of certain liabilities retained in connection with the 2016 sale of the dry cooling business. | |||||||||||||||||
(5) Adjustment represents the removal of (i) non-service pension and postretirement charges ($0.2) and (ii) removal of foreign currency losses associated with the South African projects ($0.3). | |||||||||||||||||
(6) Adjustment represents the tax impact of items (1) through (5) above. | |||||||||||||||||
| SPX CORPORATION AND SUBSIDIARIES | |||||||||||||||||
| NON-GAAP RECONCILIATION - EARNINGS PER SHARE | |||||||||||||||||
| Three Months Ended March 30, 2019 | |||||||||||||||||
| (Unaudited; in millions, except per share values) | |||||||||||||||||
| GAAP | Adjustments | Adjusted | |||||||||||||||
Segment income (1) | $ | 20.8 | $ | 25.5 | $ | 46.3 | |||||||||||
Corporate expense (2) | (12.4) | 1.6 | (10.8) | ||||||||||||||
| Long-term incentive compensation expense | (3.5) | — | (3.5) | ||||||||||||||
| Special charges, net | (0.1) | — | (0.1) | ||||||||||||||
Other operating expense (3) | (1.8) | 1.8 | — | ||||||||||||||
| Operating income | 3.0 | 28.9 | 31.9 | ||||||||||||||
Other income, net (4) | 7.2 | (5.3) | 1.9 | ||||||||||||||
| Interest expense, net | (5.0) | — | (5.0) | ||||||||||||||
| Income from continuing operations before income taxes | 5.2 | 23.6 | 28.8 | ||||||||||||||
Income tax provision (5) | (4.6) | (1.2) | (5.8) | ||||||||||||||
| Income from continuing operations | 0.6 | 22.4 | 23.0 | ||||||||||||||
| Dilutive shares outstanding | 44.880 | 44.880 | |||||||||||||||
| Earnings per share from continuing operations | $ | 0.01 | $ | 0.51 | |||||||||||||
(1) Adjustment represents the removal of (i) operating losses associated with the South Africa and Heat Transfer businesses ($22.6), (ii) inventory step-up charges related to the Cues and Sabik acquisitions ($1.3), and (iii) amortization expense associated with acquired intangible assets ($1.6). | |||||||||||||||||
(2) Adjustment primarily represents removal of acquisition related expenses incurred during the period. | |||||||||||||||||
(3) Adjustment represents removal of charges associated with revisions to estimates of certain liabilities retained in connection with the 2016 sale of the dry cooling business, with such revision resulting from settlement activity during the period. | |||||||||||||||||
(4) Adjustment represents the removal of (i) a gain on an equity security associated with a fair value adjustment ($6.3) and (ii) non-service pension and postretirement charges ($1.0). | |||||||||||||||||
(5) Adjustment represents the tax impact of items (1) through (4) above and the removal of certain income tax charges and benefits that are considered nonrecurring. | |||||||||||||||||